One thing I'm curious about (but haven't seen mentioned yet), is whether the bitcoins that were seized were Ulbrichts or "DPR's". That might seem like a silly distinction (as obviously the state is arguing that Ulbrict is DPR), but I can imagine a case where it's actually important.
i.e.: If the FBI identified the bitcoins as part of their efforts investigating DPR, for Ulbrict to claim ownership of them might actually be bad for his defense. On the other hand, if they were seized when he was apprehended (presumably they were stored on his laptop), than I think it becomes much less problematic for him to assert that they are his.
You can't use the proceeds of crime to fund your defense.
If he can't show income then he gets a public defender.
Also this is a federal defender and my understanding (I'm a Brit watching from afar) is they are like our QC's (Queens Counsel - essentially very good and experienced legal professionals) rather than the stereotypical "plead to everything and go to lunch" public defenders.
Public defenders range from quite good to incompetent, but almost all of them are over-worked because of the large number of things made illegal in our bloated legal system. So, many public defenders encourage their clients to plea guilty for crimes they did not commit. Sadly this happens far too often in the US. HBO did a documentary about this recently: www.hbo.com/documentaries/gideons-army
>You can't use the proceeds of crime to fund your defense.
Alleged crime, but you're right. In this country, the gov't can seize your assets and deprive you of them prior to proving that you are a criminal, or that the assets have any relation to criminal conduct.
>You can't use the proceeds of crime to fund your defense.
Sidestepping the due process issue for a moment, is that even a meaningful concept? Money is fungible. If you make $5,000 earned from your day job, and $5,000 from selling drugs, and you spend $5,000 on a car, is the money you have left drug money or honest money?
Criminals often employ people to keep their "legitimate" earnings separate from their criminal earnings. Whitey Bulger had lawyers and accountants working for decades to shuttle money into real estate and mundane businesses so he could keep it out of the government's hands. In Bulger's case, the government is trying to seize the money now that he's been caught and convicted, but it's not yet a sure thing that they'll get it.
The assets you presume him to have are the proceeds of a massive online narcotics market. Or is there some other source of income you're saying were seized?
So in this case he probably is DPR and probably is guilty of at least most of what he's accused of. But because they don't have to prove guilt before seizing assets, they could easily just grab some random person, say "You ran this online drug ring, so we're seizing all of your assets" and then leave you with a public defender.
And that's pretty messed up. It's also messed up that being stuck with a public defender is messed up, but that's another issue. The concept of assuming guilt before trial with respect to your finances is obviously a violation of the spirit - if not the actual letter - of the Fifth Amendment.
I'm not going to argue that the asset forfeiture laws in the US are completely fair, but that's not how it works.
First off, you can't just arrest anyone without going in front of a judge and getting an arrest warrant (unless of course a police officer has evidence you committed a crime). Second, they need to identify your assets and then prove that they are proceeds from illegal activities. Do they just say "all of it is"? Probably and the onus is on you to prove otherwise.
Of course the source of the funds may be obvious. That doesn't mean we should short out the usual due process, the same reason we have the "fruit of the poisonous tree" doctrine.
There is a well-established due process scheme for seizing assets. It has a lower standard of proof because it establishes only that a crime took place and that an asset is linked to the crime, without establishing culpability.
Tax returns - or the lack thereof. There's almost no way in the US to make more than about 10k without it being traceable.
Also I can totally be wrong about this its one of those "I' think I heard this a few times" but I think this is one of those things where the burden of proof ends up more on the side of the accused then on the gov't.
The thing is, proof beyond a reasonable doubt is not mathematical/logical proof, it's (as I recall the jury instructions I've seen on this) basically proof to a degree that a reasonably diligent person would use in their most important business dealings.
Multiple sources of evidence that point in the same direction, even when there are theoretically possible innocent explanations for all them, can still constitute "proof beyond a reasonable doubt", which is not "proof beyond any doubt".
The way I understand it, you can analyze it mathematically. Say one piece of circumstantial evidence puts the likelihood of guilt at 20%/ not guilty at 80%. Now another one has a 15/85 ratio. Take that 15% from 80%, and you now have a 68% not guilty / 32% guilty. Keep going until you have a good enough number, and you have your verdict. Now what that number should be? 90% guilty? 95%?
They can also do it in the form of suing the assets - the money is the defendant. There's no presumption of innocence and you have to establish a preponderance of evidence that it's legit.
On the topic of tax evasion... what if they arrest somebody and find many thousands of bitcoins in their possession, but that somebody claims that they mined them themselves (and the block-chain confirms they weren't transferred)? What if they were all mined when they were basically worthless?
But someone else can fund your defense. If he is in fact DPR, which hasn't been proven yet in a court of law, then he could move bitcoins to someone who could convert them to USD and fund his defense.
Alternatively, what stops people from investing in defendants. If Ulrich is in fact DPR and has 80mm in Bitcoins or large portion thereof stashed away somewhere, wouldn't it make sense for some rich person to fund DPR's defense on the condition that a portion of the 80mm is paid to the investor. Everything would be done through a lawyer the investor trusts, and Ulrich would have attorney client privilege and could in fact privately confide through the lawyer how much return he can make on a successful defense.
Spending $1-2 million defending someone, with the chance of getting a 10x return in 1-2 years seems like a pretty good deal if you can build up the rapport
Could you prepay your attorney(s) / legal team in the form of retainers like they (seem to) do in the television show "The Wire"?
The cost of any future trial could be anticipated ahead of time and paid upfront by the perpetrating party. Right?
That way there is no burden on the accused, to prove how the cost of the trial will be borne. Right?
The state (DA) must know that there is certainly no way "Stringer Bell" or "Avon Barksdale" can afford a high priced lawyer (Maurice Levy) from the proceeds of a legitimate yet small-time printing business - an obvious front operation for their drug dealing syndicate, which constituted the lion-share of their earnings.
I think that is correct. If so, it's also screwed up because it actually favors the guilty. An innocent person who believes in the justice system would think that they have no reason to retain a lawyer in advance. A smart criminal would do so as an obvious precaution.
Well, I somehow doubt that attorneys take payment in bitcoins, so they didn't have to find or seize the bitcoins. People forget that they're all publicly stored in the blockchain, so everyone would have a reasonable suspicion which bitcoin addresses are used for Silk Road. If Mr. Ulbricht decided to liquidate some of those assets into a bank account, even if he used one of those "launderer" services, it would be clear that a certain amount left that bitcoin address, and somehow that exact amount in dollars ended up in the account. Not exactly good for defending your innocence.
Why wouldn't you take payment in bitcoins if you were an attorney with a potential client with $80 million of them? Maybe you charge them an extra few $100k, but you take the business.
As for everyone having a reasonable suspicion which bitcoin addresses are used for silk road, I would assume Silk Road taint is rather like cocaine on US cash; it's everywhere.
I think if the lawyer then tried to sell off his fee in bitcoins in order to get some real money, he'd crash the market. Especially since you can't use bitcoins to buy drugs anymore.
Prosecutors said they expect to transfer Ulbricht to the East Coast, where he faces a criminal complaint filed in New York and a grand jury indictment handed down in Maryland.
If they had arrested someone in New York, the complaint would have been filed in Texas and the grand jury would be impaneled in San Francisco.
Usually they file charges in the jurisdiction where the crime took place. I suspect there's no logical jurisdiction when the transactions occurred remotely. The investigators were apparently in FBI agents in New York and Maryland. The New York and Maryland U.S. Attorneys both conducted investigations and both filed charges. New York apparently indicted him first. He may also have to stand trial in Maryland later. Popehat has more information.
"Goodnight Wesley, I'll probably convict you in the morning."
So the whole extortion / murder-for-hire angle is interesting. I'm wondering how they jump over the reasonable doubt hurdle with anonymous accounts. That said, someone got access to the 26K+ bitcoins that SR "had" so if nothing else the cops seized and shut down the correct hardware.
I'm not sure how to feel about Ross, idealistic dreamer or drug dealer in idealism cover story? Or random guy who got stuck with the bust because some third party was doing all of their dirty work through his compromised laptop? Between Ulbrich and Snowden a lot of the "impact" of the Internet is going from the hypothetical to the actual.
So perhaps someone should enable a layer of plausible deniability in the form of a program which makes it look like your machine(s) has been compromised and controlled for a long time now.
> In one case, they said, Ulbricht paid $80,000 in bitcoins to have a former website employee tortured and killed after he was arrested. But according to prosecutors, the anonymity of Silk Road backfired on Ulbricht after he asked a purported drug smuggler to carry out the hit.
The smuggler was actually an undercover agent, the government said - the same agent who had arrested the employee.
Are there more details about this previous arrest?
Here are a bunch of details from the Crimal Complaint:
• This has been a joint operation run the cybercrime squad within the FBI's New York field office. It involved theFBI, DEA, IRS and Homeland Security's investigative unit.
• ---
• It's unstated from when the investigation started, but they received a complete copy of the Silk Road web server on the 23rd of July 2013. This was all done under the Mutual Legal Assistance Treaty, which implies that they had access to current site information up until the point they shut the site down.
• This included user account and transaction information. It's unclear whether or not this covers addresses and other sensitive transaction information.
• This also apparently covers at least 60 days worth of messages from the period where the site was copied.
• From February 6, 2011 to July 23 2013, 9,519,664BTC was generated in sales, 614,305BTC going directly to DPR in the way of "commissions". This comes to a total of 1,229,465 transactions.
• Based on the copy of the site which the FBI received, they believe DPR to have been the sole operator and owner of SR, handling all aspects of the site himself and delegating only user affairs to appointed moderators.
• ---
• In March of this year, a SR user/vendor called "FriendlyChemist" attempted to extort DPR via SR's private message system, providing proof that he had the names/addresses of thousands of vendors/users after having allegedly hacked a bigger vendor. He demanded $500,000USD, saying that he needed the money to pay off his supplier. DPR then stated that he wished to speak to FriendlyChemist's supplier.
• A user called "redandwhite" then proceeded to contact DPR, stating that he was FriendlyChemist's supplier and also the owner of his debt. DPR then solicited redandwhite to "execute" FriendlyChemist, supplying redandwhite his full name and address. After having agreed on terms, DPR sent redandwhite approximately $150,000USD (1,670BTC) to have FriendlyChemist killed. redandwhite later provided photographic proof of the alleged murder.
• Investigators could not find any record of somebody in that region being killed around that date or matching that description. This possibly implies that DPR was duped/scammed, but, DPR is also quoted as having told redandwhite the following: "Not long ago, I had a clean hit done for 80k."
• ---
• DPR has been identified as Ross William Ulbricht.
• > "He is 29 years old, graduated from the University of Texas with a Bachelor of Science degree in Physics in 2006. From 2006 to 2010, he attended graduate school at the University of Pennsylvania School of Materials Science and Engineering."
• His LinkedIn profile is at: http://www.linkedin.com/in/rossulbricht
Now, onto how he got caught...
• An agent involved in the investigation ("Agent-1"), found the first few references to SR on the internet from somebody only identified as "altoid", attempting to promote the site in its beginning days, in January of 2011.
• In October of the same year, a user also going by the name of "altoid" made a posting on Bitcoin Talk titled "a venture backed Bitcoin startup company", which directed interested users to "rossulbricht at gmail dot com".
• That email address is what led to DPR's downfall.
• ---
• After identifying "altoid", they started connecting the "DPR" identity to Ulbricht pretty quickly.
• Ulbricht's Google+ page and YouTube profile both make multiple references to the a website dubbed the "Mises Institute". DPR's signature on the SR forums contained a link to the Mises Institute.
• DPR cited the "Austrian Economic theory" along with the works of Ludwig von Mises and Murray Rothbard, all of which are closesly associated with the Mises Institute.
• Server logs show that someone logged onto the SR administration panel from San Fransisco around the same time that Ulbricht was staying in San Fransisco.
• Multiple fake IDs were intercepted by U.S. Customs & Border Patrol while on their way to an address which Ulbricht was living at the time. These IDs all carried photos of Ulbricht but had false names and details. This was around the same time that DPR stated in a message that he was acquiring some fake IDs to buy new servers.
• When questioned by Homeland Security about the fake IDs, he refused to answer any questions but then stated that anyone could purchase such things using "Silk Road" and "Tor".
• The address which Ulbricht was staying at was being rented in cash and he was living with housemates who knew him under a name which corresponded with one of the fake IDs.
• He posted on StackOverflow using his real name, inquiring about how to use curl/PHP to grab things off Tor, before quickly changing the name to "frosty" (with a fake email: frosty@frosty.com)
Second murder conspiracy allegation
• A superseding indictment was filed in federal court in Maryland less than a day after Ulbricht was initially arrested and charged. This details DPR attempting to have somebody tortured and murdered for $80,000.
• This is likely the incident which he referenced when speaking to "redandwhite" about having "FriendlyChemist" killed.
• He has been indicted in Maryland for charges stemming from these allegations of murder for hire.
• The charges are as follows: Attempted Witness Murder (carries a maximum sentence of 30 years), Use of Interstate Commerce Facilities in Commission of Murder-for-Hire (carries a maximum sentence of 10 years), Conspiracy to Distribute a Controlled Substance (carries a possible sentence of 10 years to life imprisonment) and Aiding & Abetting (carries a matching sentence of the crime which the accused aided and abetted with).
• It is alleged that in February of this year, undercover agents approached DPR claiming to want to sell large amounts of cocaine, with DPR acting as a middle-man to facilitate the finding of a buyer for the drugs.
• One of DPR's "employees" then agreed to receive the drugs and was then apprehended by police upon receiving a package which he believed to be a kilo of cocaine.
• This employee then allegedly stole money from some SR users and went missing, which led DPR to believe that he might talk to the police.
• DPR then solicited the undercover agents to have the employee tortured to give the stolen Bitcoins back.
• A day later, DPR changed his mind and requested that they kill him after torturing him, stating that he"was on the inside for a while, and now that he's been arrested, I'm afraid he'll give up info."
• They agreed on a price of $80,000 for the torturing and murder of the employee, with $40,000 paid in advance and $40,000 paid on proof of completion.
• DPR then sent $40,000 from Technocash Limited to a bank account at the Capitol One Bank in Washington D.C.
• The undercover agents provided DPR with photos of the employee being tortured, then finally, dead.
• DPR then sent another $40,000 using the same method.
i.e.: If the FBI identified the bitcoins as part of their efforts investigating DPR, for Ulbrict to claim ownership of them might actually be bad for his defense. On the other hand, if they were seized when he was apprehended (presumably they were stored on his laptop), than I think it becomes much less problematic for him to assert that they are his.